Trade wars are good, and easy to win -- that’s a Donald Trump assertion which is giving succor to dollar bulls.

They see the greenback as a better haven than gold should the tariff tit-for-tat intensify. Four months after the U.S. president shocked equity markets with his vision of higher duties on imports to America, investors are discovering catalysts that should help the nation’s currency withstand trade turbulence better than gold.

“The dollar has become the main destination for safe-haven investors,” Ole Hansen, head of commodity strategy at Saxo Bank A/S, said by email from Copenhagen. “Geopolitical risk is on the rise, bonds and stocks have sold off and yet gold continues to drift lower.”

The prospect that import tariffs will reduce the biggest economy’s current-account deficit at a time when the Federal Reserve raises interest rates has created a rare opportunity. The dollar can be used both as a haven and in carry trades, according to Andreas Steno Larsen, a global currency strategist at Nordea Bank AB in Copenhagen.

The currency’s hold over gold is strengthened by the fact the metal is usually priced in dollars -- they’re inversely correlated.
Bad Half

With bullion last week posting its worst first-half performance in five years, investors are recalculating how they weight traditional assets. The push is coming from a confluence of events, from Trump’s antagonistic stance toward America’s trading partners, to the fact that the Fed is winding down quantitative easing earlier than its counterparts in Japan or Europe.

The global stocks benchmark MSCI All Country World Index just notched its first back-to-back quarterly decline since 2015, and emerging-market equities posted the first drop in six quarters. Meanwhile the dollar is outperforming most major currencies. As the world’s most liquid bond market offers higher yields, the appeal dwindles for holding an asset bereft of an income stream such as gold.